Saturday, June 13, 2020

Why We Are Experiencing Low Price for Gasoline?

It's not that people are complaining but you have to consider that the recent fall of gasoline price left you wondering why it happened. And, you really want to understand why in order for you to know if this kind of trend in the price will continue on or will it suddenly stop and reverse.

First of all, you need to understand that there are quite a lot of reasons why we are experiencing a fall in the price for gasoline. You may think about low demand and high supply of gasoline in the world market. Although this is true, this is just one of the many reasons why. There are other reasons that you need to take a look at in order for you to really understand how gasoline prices rise and fall. The supply and demand scenario is just scratching the surface for the reasons why gasoline prices today are at an all time low.

The fact that the demand for oil normally rises during the winter months, it will really leave you wondering why gasoline prices continue on decreasing and the demand for it is too.

One reason aside from the supply and demand factor is that oil intermediaries have credit problems. You need to be aware that the oil industry has a lot more players than we think. Oil intermediaries use the services of contractors in order to do many functions that are essential in the operation of the oil company. For example, you need to remember that the oil is shipped by ocean going vessels and also through pipelines. Also, the refineries that refine the oil to gasoline and other oil products are often separate from the company that products the oil.

Gas stations are also owned independently.

The fact that the sellers want to be sure that they are going to be paid for their product, they often sell to buyers with poor credit. By doing so, it will remove some players as well as some demand from the system. All in all, credit woes can really push the price of gasoline and other oil products down.

You also need to remember that if an oil company can't ship the oil to countries consuming the oil, it will never be able to sell the oil. The reason for this is that shippers that bring tankers from the ports to the countries consuming the oil are seeing a reduction of available credit. This leads to scarcity of capacity for shipping which also pushes the price for gasoline and other oil products down.

As you can see, supply and demand is not the only reason why oil price and gasoline price is continuing to go down. If this kind of situation continues, you can expect to see gasoline prices go down some more. In fact, analysts have predicted that it will still go down even after Thanksgiving. This will make a lot of people happy, especially people who drove home for Thanksgiving.

These are the things that you have to remember when you want to know about low gasoline prices. It is a fact that the supply is high and the demand for gasoline is low and is a contributing factor to the low gasoline price that we are experiencing today. However, this is not the only reason why gasoline price is low. You need to remember that credit woes of oil intermediaries also contribute to the low price of gasoline.